Fears rose last night that job losses in the public sector will be higher than forecast by George Osborne's new tax and spending watchdog after it emerged the Office for Budget Responsibilty used a narrower definition of the state workforce than official statisticians.

The OBR stripped out 550,000 employees of state enterprises such as Royal Mail, London Underground and the banks taken into public ownership during the financial crisis when it calculated the potential job losses from the chancellor's emergency budget, it confirmed today.

In its analysis of the budget measures, the OBR estimated about one in 10 jobs will be lost in the public sector over the next five years. Labour said that if the same attrition rate were applied across the wider measure of the public sector used by the Office for National Statistics, an extra 50,000 posts would go.

The ONS puts the size of the state payroll at 6.09 million against the OBR's 5.53 million. An OBR spokesman said: "The OBR forecasts published on 30 June are for general government employment, not the public sector."

Downing Street said today that Osborne would retain the right to appoint the members of the OBR when the watchdog is put on a permanent footing later this year, but Westminster sources said an intense debate was under way inside the Treasury over how much freedom to grant the OBR after a bruising week in which its forecasts and independence have been queried.

Sir Alan Budd, who said this week he will be stepping down as interim chair of the OBR at the end of the month, is expected to be questioned by the Commons Treasury committee on Tuesday, and the chancellor will flesh out his plans for the institution when he gives evidence to the same committee next Thursday. Osborne's aides said last night that the OBR would be independent, but the need for the watchdog to be made aware of budget secrets meant it had to have "a close working relationship" with the Treasury.

The shadow chancellor, Alistair Darling, said: "There were already serious questions about the independence of the Office of Budget Responsibility. Now its very credibility is at stake.

"Right from the start the Tories used the OBR not just as part of the government but as part of the Conservative party. They have succeeded in strangling what could have been a good idea at its birth."

The row over the forecasts adopted by the OBR also focused on the prediction the recovery would generate 2m private sector jobs over the next five years. Last week analysis by the TUC showed this target had never been reached in the modern era. In the recession of the 1980s it took eight years to create 2m jobs, and nine years after the recession of the early 1990s.

Further analysis by the TUC reveals the sectors that led the recoveries in the 1980s and 1990s. In both cases a sharp rise in financial services jobs and the public sector boosted employment levels.

For the next five years public sector jobs are expected to fall by 490,000, before reaching 610,000 in 2016. The financial services industry is likely to expand after its near-demise during the credit crunch, but government plans to curtail the aggressive activities of the City and tackle "socially useless" banking practices is expected to stifle a recovery in job numbers.

TUC general secretary Brendan Barber said: "The more that people look at the OBR jobs growth forecasts the more they look like wishful thinking. One silver cloud in the recession was that many firms held on to their skilled workforces, but this means they will be even less likely to take on new staff as the economy recovers.

"I'm all for the politics of hope, but expecting these forecasts to triumph over the experience of previous downturns looks like tipping North Korea for the next World Cup."

In previous recoveries, new industries such as mobile phones and the internet have spurred job growth. Economists said it was possible the next five years could witness the growth of new industries that are now in their infancy.

However, the government would need to reverse a 40-year trend for manufacturing to increase its job count.